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United States Government Accountability Office
GAO Testimony
Before the Subcommittee on Transportation,
Housing and Urban Development, and Related
Agencies, Committee on Appropriations,
House of Representatives
HUD INFORMATION
For Release on Delivery
Expected at 10:00 a.m. EDT
Thursday, March 29, 2012
TECHNOLOGY
More Work Remains to
Implement Necessary
Management Controls
Statement of Valerie C. Melvin, Director
Information Management and Technology
Resources Issues
GAO-12-580T
March 29, 2012
HUD INFORMATION TECHNOLOGY
More Work Remains to Implement Necessary
Management Controls
Highlights of GAO-12-580T, a testimony
before the Subcommittee on Transportation,
Housing and Urban Development, and
Related Agencies, Committee on
Appropriations, House of Representatives
Why GAO Did This Study What GAO Found
The Department of Housing and Urban HUD has made progress in implementing prior GAO recommendations on
Development (HUD) performs a range modernizing its IT environment; however more actions are needed. In 2009,
of significant home ownership and GAO reported that HUD lacked key IT management controls; which are essential
community development missions that to achieving successful outcomes. Specifically,
are integral to the U.S. economy. In
doing so, HUD relies extensively on • Although the department had established an IT strategic plan that outlined
information technology (IT). However, goals and performance measures, it had not assessed its performance
HUD’s IT environment has not against established goals. As a result, HUD did not know how well it was
effectively supported its business achieving its goals and where it needed to improve.
operations, and as a result, the • While the department had established policies and procedures for developing
department has been working to a complete portfolio of its investments, it had not established policies and
modernize its IT infrastructure. To procedures for evaluating that portfolio. This meant that it was limited in its
provide oversight and inform decision- ability to control risks and achieve benefits associated with the mix of legacy
making, Congress required that HUD systems and modernization investments it selected.
develop and submit plans describing
• HUD’s Office of the Chief Information Officer had not adequately assessed
how it intends to use its expenditures
its IT workforce needs, inventoried existing staff knowledge and skills, and
to support its modernization efforts. In
addition, Congress required GAO to
identified gaps between needs and existing capabilities. As a result, the
review these expenditure plans to department was not well positioned to acquire the skill sets it needed.
determine if they meet statutory • The department had not fully developed its enterprise architecture (EA)—
conditions. which provides a blueprint for investing that connects strategic plans with
individual programs and system solutions. This meant that HUD lacked a
GAO was asked to testify on HUD’s sufficient basis for guiding and directing its modernization projects.
progress in implementing its prior
recommendations on (1) modernizing GAO made a number of recommendations to HUD aimed at strengthening its
its IT systems and (2) improving its management capabilities, and while progress has been made in addressing
expenditure plans. In preparing this them, work remains. For example, HUD issued a department-wide strategic plan
statement, GAO relied on previous with associated goals that aligned with new IT strategic goals. However, the
work at HUD. department had not developed criteria for assessing the performance of its
portfolios, finalized its plan to address its IT workforce needs, or established an
What GAO Recommends approved policy for its enterprise architecture.
GAO is not making new
HUD’s modernization expenditure plans, which are to describe how the agency
recommendations. As noted, GAO has
previously made recommendations
plans to spend IT modernization funding, have improved in response to GAO’s
aimed at assisting HUD in fully recommendations. These plans are to meet statutory conditions that include
implementing key IT management identifying, for each modernization project, capabilities to be delivered, expected
controls. benefits, estimated costs, and key milestones; and showing that each project is
supported by adequate staff, conforms to capital planning and investment control
requirements, complies with the department’s EA, and is being managed in
accordance with department lifecycle management policies. GAO found that
HUD’s 2010 expenditure plan contained weaknesses and thus was limited as a
congressional oversight and decision-making mechanism. Accordingly, GAO
recommended, among other things, that the department ensure future plans
satisfied each element of the statutory conditions. In response, subsequent
expenditure plans submitted in 2011 and 2012 satisfied the conditions. As a
result, these more recent plans have provided key information needed for
continued oversight of the modernization projects.
View GAO-12-580T. For more information,
contact Valerie C. Melvin at (202) 512-6304 or
melvinv@gao.gov.
United States Government Accountability Office
Chairman Latham, Ranking Member Olver, and Members of the
Subcommittee:
I am pleased to participate in today’s hearing to discuss the Department
of Housing and Urban Development’s (HUD) management challenges.
HUD performs a range of significant home ownership and community
development missions that are integral to our nation’s economic well-
being, and it relies extensively on information technology (IT) to carry out
these missions. Moreover, legislation enacted since 2008 to stimulate the
economy, in part through strengthening the housing market, has
continued to expand the department’s responsibilities and thus its need
for IT support. For example, the department’s increased responsibilities
under the Housing and Economic Recovery Act of 2008 introduced
greater processing requirements for Federal Housing Administration
(FHA) mortgage insurance programs, which further increased its reliance
on information systems and other IT services. 1
Nevertheless, HUD has long experienced shortcomings in its IT
capability. As we reported in 2009, the department’s IT environment did
not effectively support its business operations. 2 The department’s
operating plans and budget submissions indicated, for example, that its
information systems were overlapping and duplicative, were not
integrated, necessitated manual workloads, and employed antiquated
technologies that were costly to maintain. Since our report, the
department has been working to modernize its IT infrastructure.
To provide oversight and inform decision-making, Congress established
limitations on funding for HUD’s IT modernization efforts through
appropriations acts in fiscal years 2010 and 2011. 3 In addition, these acts
required us to review and provide an assessment of HUD’s IT
modernization expenditure plans. To this end, we issued two reports—in
1
Housing and Economic Recovery Act, 2008, Pub L. No. 110-289, § 2126, 122 Stat. 2654,
2840-41 (July 30, 2008).
2
GAO, Information Technology: HUD Needs to Strengthen Its Capacity to Manage and
Modernize Its Environment, GAO-09-675 (Washington, D.C.: July 31, 2009).
3
Department of Housing and Urban Development Appropriations Act, 2010, Pub. L. No.
111-117, div. A, tit. II, 123 Stat. 3074, 3093-3094 (Dec. 16, 2009); and Department of
Defense and Full-Year Continuing Appropriations Act, 2011, Pub. L. No. 112-10, § 2259,
125 Stat. 38, 197-98 (April 15, 2011).
Page 1 GAO-12-580T HUD Information Technology
November 2010 and September 2011—that documented the results of
our fiscal year 2010 expenditure plan review. 4 Further, earlier this week,
we briefed the Committees’ staff on a just-completed third review which
examined the department’s fiscal year 2011 expenditure plan.
At your request, my testimony today summarizes HUD’s progress in
implementing our prior recommendations on (1) modernizing its IT
systems and (2) improving its expenditure plans.
The information in my testimony is based on our previous reports on
HUD. All work on which this testimony is based was conducted in
accordance with generally accepted government auditing standards.
HUD’s mission to create strong, sustainable, and inclusive communities
Background and quality and affordable homes for all has significantly evolved due to
the current economic and housing crisis. Accordingly, the department has
increased its reliance on IT. In particular, legislation enacted over the past
several years has given the department new responsibilities for, among
other things, strengthening the housing market. For example, the Housing
and Economic Recovery Act of 2008 5 established a program intended to
help families avoid home foreclosure by refinancing them into mortgages
insured by FHA. 6 As a result, the number of mortgage loans insured by
FHA more than tripled between 2006 and 2010, from almost half a million
loans to 1.7 million loans. This in turn resulted in the need for much
greater system processing capabilities to accommodate the increased
demand. 7
IT plays a critical role in the department’s ability to carry out its growing
mission by supporting data collection and dissemination throughout the
4
GAO, Information Technology: HUD Needs to Better Define Commitments and Disclose
Risks for Modernization Projects in Future Expenditure Plans, GAO-11-72 (Washington,
D.C.: Nov. 23, 2010); and Information Technology: HUD’s Expenditure Plan Satisfies
Statutory Conditions, and Implementation of Management Controls Is Under Way,
GAO-11-762 (Washington, D.C.: Sept. 7, 2011).
5
Pub. L. No. 110-289, § 2126.
6
FHA provides mortgage insurance on loans made by approved lenders.
7
GAO, Federal Housing Administration: Improvements Needed in Risk Assessment and
Human Capital Management, GAO-12-15 (Washington, D.C.: Nov. 7, 2011).
Page 2 GAO-12-580T HUD Information Technology
department and to external parties. For instance, the department reports
that its business areas rely on IT to process over 50,000 loan requests
per week, over 12,000 service calls per month, and more than 7,000
grant requests annually for each of its major grant programs.
HUD’s IT Environment Despite its growing mission, HUD’s IT environment has not effectively
supported its business operations. In 2009, we reported that the
department’s IT had consisted of:
• over 200 information systems, many of which performed the same
functions and, thus, were duplicative;
• stove-piped, nonintegrated systems that could not share related data;
• manual processing for key business processes; and
• systems that were nearly 15 years old (on average), including several
different operating systems and using 35 different programming
languages.
A factor that had contributed to the state of HUD’s IT environment was
the department’s focus, primarily, on the maintenance of its existing
systems and infrastructure, rather than on the modernization needed to
meet its expanding mission needs. For example, in fiscal year 2008,
about 2 percent of the department’s IT obligations were for new
development, whereas the remaining 98 percent were obligated for
operating and maintaining legacy systems.
HUD’s Office of the Chief Information Officer (OCIO) is responsible for
supporting the department’s programs, services, and management
processes by providing IT solutions and services. Additionally, the OCIO
is responsible for developing, modernizing, and enhancing the IT
environment. To this end, in 2010, the OCIO established four
management goals, which aligned with the department’s 2010-2015
Strategic Plan: (1) enhance the quality, availability, and delivery of HUD
information to citizens, business partners, and government; (2) promote
an enterprise approach to IT that will foster innovation and collaboration;
(3) achieve excellence in IT management practice; and (4) transform the
OCIO to a culture of operational excellence that can achieve current and
future departmental goals. 8
8
HUD Strategic Plan Fiscal Year 2010-2015 (May 2010).
Page 3 GAO-12-580T HUD Information Technology
To assist HUD in its modernization efforts, Congress has authorized and
appropriated funding for the department in multiple statutes. For example,
in recognizing the need to modernize the department’s IT environment,
the Housing and Economic Recovery Act of 2008 authorized $25 million
for each fiscal year, from 2009 through 2013, for improvements to FHA’s
IT, among other things. In addition, according to department officials,
HUD used approximately $1.5 million of the funding provided in the
American Recovery and Reinvestment Act of 2009 for improving IT
capabilities across a range of programs. More recently, the appropriations
acts for fiscal years 2010 and 2011 9 made available to HUD for
expenditure $180 million and $71 million, respectively, for IT
modernization to support its Transformation Initiative. 10
While HUD has been working to modernize its IT systems, we reported in
Progress Has Been 2009 that the department lacked sound management controls that are
Made in Implementing essential to achieving successful outcomes. These controls included IT
strategic planning, investment management, enterprise architecture, and
Recommendations on human capital planning. We recommended that the department make
HUD’s IT improvements in these areas, and while it has taken a number of
Modernization, but important steps, additional actions are still needed by the department to
respond to remaining concerns. 11
More Work Remains
• Strategic planning and performance management: Effective IT
strategic planning and performance management are intended to
ensure that an organization’s IT strategic goals are aligned with its
overall mission goals and outcomes and that these goals are
supported by clearly defined (1) activities aimed at accomplishing the
goals and (2) measures for determining performance in accomplishing
the activities and goals.
In 2009, we found that although HUD had established an IT strategic
plan that outlined goals and performance measures, it had not
assessed its IT performance against established goals since fiscal
9
Pub. L. No. 111-117 and Pub. L. No. 112-10.
10
HUD’s Transformation Initiative consists of four components: (1) research, evaluation,
and program metrics; (2) program demonstrations; (3) technical assistance and capacity
building; and (4) information technology.
11
GAO-09-675 and GAO-11-762.
Page 4 GAO-12-580T HUD Information Technology
year 2007. By not regularly assessing and reporting progress against
its strategic IT performance measures and activities, HUD did not
know how well it was achieving its strategic goals and where it
needed to improve. We recommended that HUD establish a plan for
developing and implementing the department’s performance
management framework, including an implementation schedule of key
activities and related resource needs, and ensure that this plan
provides for annually reporting progress in achieving IT strategic
goals.
In September 2011, we reported that HUD had fully implemented this
recommendation by issuing a new department-wide strategic plan
with associated goals that aligned with new IT strategic goals that the
OCIO developed.
• IT investment management: Investment management is aimed at
selecting, controlling, and evaluating IT investments in a manner that
better ensures that they produce business value, reduce investment-
related risks, and increase accountability and transparency in the
investment decision-making process. As we have previously reported,
moving away from project-centric investment management and
toward a portfolio-based approach, is considered a best practice. By
managing investments as a portfolio, an organization can consider
new investment proposals, along with previously funded investments,
and identify the appropriate mix and synergies of these investments to
best meet mission needs, technology needs, and priorities for
improvement.
In 2009, we reported that while HUD had established a range of
policies and procedures for developing a complete investment
portfolio, it had not established policies and procedures for evaluating
the portfolio. 12 Without having defined and implemented practices for
evaluating the performance of its portfolios, HUD was limited in its
ability to control the risks and achieve the benefits associated with the
mix of legacy system and modernization investments selected.
Accordingly, we recommended that HUD develop a plan for instituting
policies and procedures for reviewing, evaluating, and improving the
performance of the department’s portfolio of investments; developing
criteria for assessing portfolio performance and reviewing and
12
GAO-09-675.
Page 5 GAO-12-580T HUD Information Technology
modifying them at regular intervals; defining and collecting IT portfolio
performance measurement data consistent with the portfolio
performance criteria; and executing adjustments to the IT investment
portfolio in reaction to actual portfolio performance.
In September 2011, we reported that, in response to our
recommendations, the department had begun establishing a new
investment management governance structure and had applied it to
its portfolio for IT modernization projects. However, HUD had not yet
developed criteria for assessing portfolio performance, or defined and
collected data consistent with the criteria. In the absence of taking
these key steps, the department has continued to be challenged in
implementing proper investment management practices.
• Human capital: As we have previously reported, IT human capital
management is intended to ensure that an organization has the
employees with the appropriate knowledge and skills to effectively
execute critical IT functions. Human capital management involves
assessing IT workforce needs, inventorying existing staff’s knowledge
and skills and identifying any gaps between needs and existing
capabilities, and developing strategies and plans to fill any gaps.
In 2009, we reported that HUD’s OCIO had not adequately performed
most of these activities. For example, while the office had analyzed
skill gaps in its IT workforce and had developed a strategy for closing
those skills gaps, OCIO officials did not know when implementation of
this strategy would begin or be completed. Additionally, the gap
analysis was based on an incomplete and outdated inventory of
human capital skill levels, thus rendering its strategy unreliable. We
noted that without effective human capital management, HUD’s ability
to have the right people to effectively operate and maintain existing
systems was impaired. Therefore, we recommended that HUD
establish and execute IT human capital gap closure strategies that are
based on a complete and current inventory of its existing IT workforce
skills.
In September 2011, we reported that HUD had made progress in this
area. Specifically, HUD began working to establish a human capital
plan that included tasks such as identifying challenges, developing
performance metrics and strategies, and addressing the identified IT
skill gaps. HUD anticipated finalizing this plan by December 2011;
however, as of this month, the plan has not yet been completed. Until
HUD finalizes its IT human capital management plan, implementation
of this management control will continue to be a challenge.
Page 6 GAO-12-580T HUD Information Technology
• Enterprise architecture: EA development and use is aimed at
establishing a corporate blueprint for investing that connects strategic
plans with individual programs and system solutions. As such, this
blueprint provides the information needed to guide and constrain
investments in a consistent, coordinated, and integrated fashion—
thereby improving interoperability, reducing duplicative efforts, and
optimizing mission operations. Developing an enterprise architecture
with associated system solutions for portions, or segments (referred to
as segment architectures), is an important aspect of this activity.
In 2009 we reported that, while HUD had established an enterprise
architecture program that met key aspects of related best practices,
its efforts to develop segment architectures were not sufficient. For
example, HUD had identified and prioritized segments to be
modernized; however, it did not adhere to these priorities, the
segments developed did not reflect important elements of federal
guidance, and most were out of date. We found that HUD had
developed eight segment architectures; however, these segments
were not the department’s eight highest priorities. As a result, HUD’s
segment architectures did not provide a sufficient basis for guiding
and directing segment projects in a manner to ensure that both,
system enhancements and new development efforts were properly
sequenced, well integrated, and not duplicative. We recommended
that HUD develop a plan for reexamining segment priorities and
updating and developing segment architectures in accordance with
these priorities and relevant guidance.
We subsequently reported in September 2011, that the department
had made progress toward implementing our recommendation, by, for
example, creating a conceptual enterprise architecture. However, it
had not yet established a policy to guide the development,
maintenance, and use of this architecture. Thus, we further
recommended that HUD establish and approve a policy to govern the
EA prior to further developing its segment architectures. In response,
HUD officials did not explicitly agree or disagree with our
recommendation, but noted that the department was working to draft
an enterprise architecture policy. As of this month, the department
had not yet finalized its EA policy. To this end, establishing a
commitment to its new EA direction remains a challenge for the
department.
Page 7 GAO-12-580T HUD Information Technology
Out of concern about HUD’s capacity to manage its IT modernization
HUD’s efforts, Congress established limitations on the funding provided to the
Implementation of department for this purpose. Specifically, the appropriations acts stated
that the department could not obligate more than 25 percent of fiscal year
Recommendations to 2010 funds and 35 percent of fiscal year 2011 funds until the Secretary of
Improve Expenditure HUD submitted to the appropriations committees in each year an
Plans Enables More expenditure plan that satisfied two sets of statutory conditions and had
been reviewed by GAO. To address the first set of statutory conditions,
Oversight for each modernization project, HUD was required to identify in the plan
(1) functional and performance capabilities to be delivered, (2) expected
mission benefits, (3) estimated lifecycle costs, and (4) planned key
milestones. To address the second set of statutory conditions, the plan
had to demonstrate that each project (1) was supported by an adequately
staffed project office, (2) conformed to capital planning and investment
control requirements, (3) complied with the department’s enterprise
architecture, and (4) was being managed in accordance with applicable
lifecycle management policies and guidance. 13
Our assessment found that the department’s first expenditure plan,
submitted in April 2010, did not adequately satisfy the two sets of
statutory conditions. 14 In particular, we found that the plan did not
describe specific and measureable mission benefits for all of HUD’s IT
modernization projects. In addition, the plan did not include information
that demonstrated compliance with regard to the department’s enterprise
architecture and capital planning for IT investments. For example, the
modernization projects could not show how they aligned to the
department’s EA because the existing EA was no longer operative. In the
absence of this information, the plan was limited as a congressional
oversight and decision-making mechanism. As a result, we recommended
that HUD ensure that future expenditure plans satisfied each element of
both sets of statutory conditions and describe the status of HUD’s efforts
to establish and implement modernization management controls.
In response, HUD submitted a revised 2010 expenditure plan in February
2011, which we found satisfied both sets of statutory conditions. For
example, the plan identified key milestones by project phase and
deliverable timeframes for the development of requirements and software
13
Pub. L. No. 111-117 and Pub. L. No. 112-10.
14
GAO-11-72.
Page 8 GAO-12-580T HUD Information Technology
releases. The plan also described how each of seven identified
modernization projects complied with the department’s evolving
enterprise architecture. Additionally, the plan clearly described the status
of the department’s efforts to implement the management controls.
Further, in January 2012, HUD submitted its 2011 expenditure plan for
our review, which also satisfied both sets of statutory conditions. For
example, the plan described specific and measureable mission benefits
for each of the identified IT modernization projects. In addition, it
described costs associated with the lifecycle of each project, providing
details on funds needed for major work activities and deliverables.
Further, the plan categorized each project relative to HUD’s evolving
architecture.
As a result of the measures that HUD has taken to respond to our
recommendations and improve the content of each subsequent
expenditure plan, it has rendered these plans more useful. In turn, the
plans should facilitate continued and more effective oversight of the
department’s IT modernization projects.
Going forward, the fiscal year 2012 appropriations act has directed us to
evaluate HUD’s 2012 expenditure plan. 15 Additionally, the 2012
conference report directed us to evaluate implementation of project
management practices, including contractor oversight and cost estimation
for selected IT modernization projects. 16 We have also been directed to
assess the department’s institutionalization of IT governance. We
anticipate initiating aspects of this work in spring 2012.
In summary, HUD has made progress in addressing certain weaknesses
that we identified in its IT management capabilities. However, it is
important to note that more actions are still needed. In particular, fully
addressing the recommendations that we have made is vital to helping
15
Consolidated and Further Continuing Appropriations Act, 2012, Pub. L. No. 112-55, 125
Stat. 552, 691-92 (Nov. 18, 2011).
16
This direction is contained in the Senate Appropriations Committee report, S. Rep. No.
112-83, at 141-42 (2011), as approved by the conference committee in the Explanatory
Statement, H.R. Conf. Rep. No. 112-284, at 286 (2001), accompanying the Consolidated
and Further Continuing Appropriations Act, 2012, Pub. L. No. 112-55, 125 Stat. 552, 691-
92 (Nov. 18, 2011).
Page 9 GAO-12-580T HUD Information Technology
the department implement sound management controls and, ultimately, to
overcome the challenges it has faced in improving its IT management
capabilities. HUD has demonstrated progress in improving the content of
its IT expenditure plans. As a result, these plans should be more useful
as an oversight tool and thus should better help to demonstrate the extent
to which the department takes the important steps that are essential to
strengthening its capacity to manage and modernize its IT environment.
Chairman Latham, Ranking Member Olver, and Members of the
Subcommittee, this concludes my statement today. I would be pleased to
respond to any questions that you may have.
If you have any questions concerning this statement, please contact
Contact and Valerie C. Melvin, Director, Information Management and Technology
Acknowledgments Resources Issues, at (202) 512-6304 or melvinv@gao.gov. Other
individuals who made key contributions include Shannin G. O’Neill,
Assistant Director; Kami J. Corbett; Lee A. McCracken; and Teresa M.
Neven.
310988
Page 10 GAO-12-580T HUD Information Technology
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